Boeing Hires a Legal Team To Handle Scandal Cases

By TIM WEINER

Published: February 4, 2005

The Boeing Company, facing legal problems at the Pentagon and the Justice Department, has hired two politically experienced outside lawyers in several highly charged cases, a company official said Thursday.

Boeing is the one of the nation's biggest military contractors. It is under fire for unethical handling of Pentagon contracts and trade secrets obtained from the Lockheed Martin Corporation, its biggest corporate rival in the weapons business.

Dan Beck, a Boeing spokesman, said in an interview yesterday that the company had hired Jamie S. Gorelick, who was deputy United States attorney general and general counsel of the Pentagon in the Clinton administration, and Richard Cullen, who is a former Virginia attorney general and an experienced white-collar defense lawyer. The company's decision to hire them to handle potential settlements in criminal and civil cases was first reported yesterday by The Wall Street Journal.

''These are extremely complex issues we're dealing with and it's just good litigation management to bring in that outside counsel to help us navigate,'' Mr. Beck said.

For the last 18 months, Boeing has been under a criminal investigation and the Air Force has barred it from new rocket contracts. The actions occurred after Peter B. Teets, the Air Force under secretary, said the company had ''committed serious and substantial violations of federal law'' by obtaining thousands of pages of proprietary Lockheed documents on the rocket launch business. The matter is in the hands of federal prosecutors, although no criminal charges have been filed.

The Air Force also revoked $1 billion worth of scheduled Boeing rocket launches as a result of the case and awarded those contracts to Lockheed, which filed a civil suit charging Boeing with practicing ''economic espionage.'' Boeing denies the accusation.

Another continuing investigation involves Boeing's central role in the Pentagon's biggest weapons procurement scandal since the 1980's.

Michael M. Sears, Boeing's chief financial officer until he was implicated in that case, is to be sentenced Feb. 18 in federal court in Alexandria, Va. He pleaded guilty to offering a job to the Air Force's chief weapons buyer, Darleen A. Druyun, while she was overseeing billions of dollars in Boeing contracts.

Ms. Druyun said she favored Boeing with $5 billion worth of preferential contracts in exchange for hiring her in 2003. She is serving nine months in prison for conspiracy. The judge in the case has indicated that Mr. Sears might receive a six-month term. The Pentagon has started auditing Boeing work approved by Ms. Druyun and has already found a $10.3 million overcharge on a contract to upgrade NATO surveillance aircraft.

One of Boeing's biggest critics in Washington, Senator John McCain, Republican of Arizona, is expected to intensify his war of words against the company after Congress reconvenes. Mr. McCain, a member of the Senate Armed Services Committee, helped kill a $23 billion Air Force plan to lease Boeing aircraft tankers after Ms. Druyun admitted she had fixed a higher price on the contract as a gift to Boeing.

This year the committee is likely to examine Boeing's role as the lead contractor on the Army's $127 billion program to build a fighting force called the future combat systems. The size and complexity of the contract is beginning to draw attention on Capitol Hill.

The Army is expected to seek more than $3 billion in new research and development funds for the program in the Pentagon budget, to be released next week. Mr. Beck, the Boeing spokesman, said that the program was proceeding smoothly.